Marlow Company purchased a point of sale system on January 1 for $3,400.This system has a useful life of 10 years and a salvage value of $400.What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?
A)$2,176.
B)$544.
C)$1,200.
D)$600.
E)$1,224.

Question

Quizplus · Accepted Answer

The double-declining-balance method doubles the straight-line depreciation rate, so the annual depreciation rate would be 20% (2/10 * 100%).

Double-declining-balance depreciation for Year 1: $3,400 x 20% = $680.
Book value at the end of Year 1: $3,400 - $680 = $2,720.

Double-declining-balance depreciation for Year 2: $2,720 x 20% = $544.
Book value at the end of Year 2: $2,720 - $544 = $2,176.

Therefore, the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method would be $544 + $680 = $1,224.

Marlow Company Purchased a Point of Sale System on January